FRANKLIN FINANCIAL NETWORK, INC. FRANKLIN, Tenn., Jan. 26, 2016 /PRNewswire/ -- Franklin Financial Network, Inc., (NYSE: FSB) the parent company (the "Company") of Franklin Synergy Bank (the "Bank"), today reported record consolidated net income of $16.1 million for the year ended December 31, 2015, an increase of 91.1% over $8.4 million for the same period in 2014. Basic earnings per common share for the year ending December 31, 2015 totaled $1.62, a 22.7% increase compared to $1.32 for the same period in 2014.
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For the fourth quarter of 2015, consolidated net income was $4.7 million, a 64.5% increase compared to $2.8 million for the fourth quarter of 2014. Basic earnings per common share for the quarter ending December 31, 2015 totaled $0.44, a 22.2% increase compared to $0.36 for the same period in 2014. Basic earnings per common share were down slightly compared to $0.49 for third quarter of 2015, which included $1.2 million of pre-tax income related to the payoff of a purchased credit-impaired loan relationship.
On a fully diluted basis, earnings per share were $0.41 for the quarter ended December 31, 2015, compared to $0.34 for the quarter ended December 31, 2014, an increase of 20.6%. For the year ended December 31, 2015, fully diluted earnings per share were $1.54, an increase of 21.3%, compared to $1.27 for the year ended December 31, 2014.
"The year 2015 was the most profitable year in the history of our bank, with earnings that nearly doubled 2014 earnings, and we posted our twenty-eighth consecutive profitable quarter," explained Richard Herrington, Chairman and Chief Executive Officer. "Organic loan growth continues to exceed expectations. Our annual growth rate in loans, including loans held for sale, is more than 63% since December 31, 2014; at the same time, we continued to diversify our loan portfolio, while maintaining a strict focus on asset quality."
"Compared to the third quarter of 2015, earnings were down slightly in the fourth quarter due to the $1.2 million of pre-tax income related to the purchased credit impaired loan payoff in the third quarter. In addition, we made investments in our profitability and growth during the fourth quarter, including expenditures related to our pending acquisition of Civic Bank & Trust and related to our risk management initiatives."
Selected highlights for the fourth quarter of 2015:
-- On December 14, 2015, the Company announced an agreement to acquire
Civic Bank & Trust, based in Nashville, TN.
-- The Company announced the addition of an office in Nolensville, TN. The
office opened on January 14, 2016.
-- The Company's loans grew $179.4 million during the fourth quarter, and
the healthcare lending team produced $53.9 million, or 30.0%, of that
growth, helping to further diversify the Company's loan portfolio.
-- Fourth quarter performance illustrates the importance of asset quality
in tandem with an organically growing bank. Nonperforming assets as a
percentage of total assets were 0.2% at December 31, 2015.
Full Year 2015 Results of Franklin Financial Network, Inc.
Balance Sheet Growth and Asset Quality
-- At December 31, 2015, assets totaled $2.2 billion, compared to $1.4
billion at December 31, 2014, an increase of 59.9%.
-- The strength of the local market as well as continued loan demand fueled
the Company's loan growth. Total loans, including loans held for sale,
totaled $1.3 billion at December 31, 2015, an increase of $512.3
million, or 63.6%, when compared with $805.7 million at December 31,
2014.
-- The majority of the loan growth was in three categories: business
lending, residential construction lending and commercial real estate
lending, which grew $207.5 million, $76.7 million and $174.4 million,
respectively.
-- The growth in business loans served to diversify the Company's total
loan portfolio with real estate lending concentration decreasing to
77.6% at December 31, 2015 from 89.1% at December 31, 2014.
-- Nonperforming assets as a percent of total assets were 0.2% at December
31, 2015 and 0.1% at December 31, 2014, significantly below industry
averages. Nonperforming assets increased $1.6 million to $3.5 million
from the December 31, 2014 total of approximately $1.9 million,
primarily due to one lending relationship.
-- Investment securities grew $285.0 million, or 63.5%, during 2015, to
$734.0 million. This growth is attributable to the leverage program of
purchasing securities during the second and third quarters of 2015 to
properly utilize the capital that was raised in the IPO during the first
quarter of 2015.
-- Deposits grew to $1.8 billion at December 31, 2015 versus $1.2 billion
at December 31, 2014, a growth rate of 54.8%. Year-to-date cost of
interest-bearing deposits was down marginally at 0.66% at December 31,
2015, compared to 0.67% at December 31, 2014.
Profitability
-- The primary driver of increased net interest income was continued growth
in earning assets (loans and investment securities). Net interest income
increased 57.6% to $59.4 million for the year ended December 31, 2015,
up from $37.7 million for the same period in 2014.
-- During the third quarter of 2015, the Company received a full payoff
of a purchased credit-impaired loan relationship, which increased
the Company's net interest income and pre-tax earnings by nearly
$1.2 million.
-- The net interest margin for the year ended December 31, 2015 was 3.59%,
a decline from 3.74% at year ended December 31, 2014, due to the growth
in investment securities.
-- Noninterest income for the year ended December 31, 2015, was $12.9
million, compared to $10.0 million for the year ended December 31, 2014,
an increase of 29.1%. Increased mortgage loan volume and improved
margins on mortgage banking accounted for $1.0 million of the increase
in noninterest income when comparing the years ended December 31, 2015
and 2014. The increase in noninterest income can also be traced to fees
generated by increased wealth management services.
-- Noninterest expense for the year ended December 31, 2015 was $42.1
million, a 32.8% increase over 2014 noninterest expense of $31.7
million.
Primary drivers of the increase in noninterest expense for the year ended December 31, 2015 compared with the same period in 2014 include:
-- Increased operating expense associated with the Company's acquisition of MidSouth Bank in July of 2014 and with the overall growth of the Company. -- Increased professional fees related to the Company's pending acquisition of Civic Bank & Trust, the Company's risk management initiatives, and other potential initiatives that the Company is currently assessing. -- Expenses associated with operating as a public company. -- The addition of a healthcare banking team during the second quarter of 2015.
-- Significant growth in both loans and deposits has allowed the Company to
achieve operating economies of scale. The Company's efficiency ratio for
the year ended December 31, 2015, adjusted for the $1.2 million earned
from the payoff of a large purchased credit-impaired loan during the
third quarter, was 59.3% at December 31, 2015, as compared to 66.6% at
December 31, 2014.
-- Provision expense for the year ended December 31, 2015, was $5.0 million
versus $2.4 million for 2014. The Company's significant loan growth
drove the increase in provision for loan losses from 2014 to 2015.
"In just over eight years, by executing our banking model, we have capitalized on growth opportunities within our markets while maintaining top asset quality," stated Herrington. "At the end of 2015, we are ahead of where we thought we would be at this point. As we move into our ninth year of operation, we plan to continue to execute the banking model we believe will lead to greater success."
Webcast and Conference Call Information
Franklin Financial Network, Inc. will host a webcast and conference call at 9:00 a.m. (CST) on January 27, 2015 to discuss year-end 2015 results. To access the call for audio only, please call 1-844-378-6480. For the presentation and streaming audio, please access the webcast on the Investor Relations page of Franklin Synergy Bank's website at www.franklinsynergybank.com.
For those unable to participate in the webcast, it will be archived on the Investor Relations page of Franklin Synergy Bank's website at www.franklinsynergybank.com for one year, with audio available for 90 days.
Founded in November 2007, Franklin Synergy Bank has seven offices in
Williamson County and five offices in Rutherford County. The Bank
provides deposit and loan products, treasury management, wealth
management, trust and financial planning services for consumers and
businesses.
The Bank's loans surpassed $1 billion in July 2015, and assets
surpassed $2 billion in September 2015. Recent FDIC data shows that
Franklin Synergy Bank is the deposit share market leader in
Williamson County as well as the city of Franklin, Tennessee. In
Rutherford County and the city of Murfreesboro, Tennessee, the Bank
ranks sixth in deposit market share.
In March 2015, Franklin Financial Network, Inc., the Bank's parent
company, completed an initial public offering. The stock trades on
the New York Stock Exchange under the ticker symbol "FSB".
Additional information about Franklin Synergy Bank is available at the
Bank's website: www.franklinsynergybank.com.
----------------------------------------------------------------------
Safe Harbor for Forward-Looking Statements
This media release contains forward-looking statements. Such statements include, but are not limited to, projected sales, gross margin and net income figures, the availability of capital resources, and plans concerning products and market acceptance. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, financial and otherwise, could differ materially from those set forth in or contemplated by the forward-looking statements herein.
Future operating results of the corporation are impossible to predict, and no representation or warranty of any kind can be made respecting the present or future accuracy of such forward-looking statements or the ability of the corporation to meet its obligations, and no such representation or warranty is to be inferred.
Franklin Financial Network, Inc.
FRANKLIN FINANCIAL NETWORK
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data) December 31, December 31,
2015 2014
---- ----
(Unaudited)
ASSETS
Cash and due from financial institutions $52,394 $49,347
Certificates of deposit at other financial institutions 250 250
Securities available for sale 575,838 395,705
Securities held to maturity (fair value 2015-$161,969 and
2014-$53,741) 158,200 53,332
Loans held for sale, at fair value 14,079 18,462
Loans 1,303,826 787,188
Allowance for loan losses (11,587 ) (6,680 )
-------- -------
Net loans 1,292,239 780,508
--------- -------
Restricted equity securities, at cost 7,998 5,349
Premises and equipment, net 7,640 9,664
Accrued interest receivable 7,299 3,545
Bank owned life insurance 22,619 11,664
Deferred tax asset 8,920 6,780
Assets held for sale 1,640 4,080
Foreclosed assets 200 715
Servicing rights, net 3,455 3,053
Goodwill 9,124 9,124
Core deposit intangible, net 2,043 2,698
Other assets 3,344 1,551
----- -----
Total assets $2,167,282 $1,355,827
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest bearing $176,742 $150,337
Interest bearing 1,637,297 1,021,896
--------- ---------
Total deposits 1,814,039 1,172,233
Federal funds purchased and repurchase agreements 101,086 39,078
Federal Home Loan Bank advances 57,000 19,000
Accrued interest payable 644 421
Other liabilities 5,697 3,296
----- -----
Total liabilities 1,978,466 1,234,028
Shareholders' equity
Senior non-cumulative preferred stock, no par value,
$10,000 liquidation value: Series A, 1,000,000 shares
authorized; 10,000 shares issued and outstanding at
December 31, 2015 and 2014, respectively 10,000 10,000
Common stock, no par value; 20,000,000 and 10,000,000
shares authorized; 10,571,377 and 7,756,411 issued at
December 31, 2015 and 2014, respectively 147,784 94,251
Retained earnings 31,352 15,372
Accumulated other comprehensive income (loss) (320 ) 2,176
----- -----
Total shareholders' equity 188,816 121,799
------- -------
Total liabilities and shareholders' equity $2,167,282 $1,355,827
========== ==========
FRANKLIN FINANCIAL NETWORK, INC
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share
data) Three Months Ended Year Ended
December 31, December 31,
2015 2014 2015 2014
---- ---- ---- ----
Interest income and dividends (Unaudited) (Unaudited) (Unaudited)
Loans, including fees $15,503 $11,119 $53,574 $35,585
Securities:
Taxable 3,278 2,527 12,362 9,459
Tax-Exempt 1,176 21 2,331 81
Dividends on restricted equity
securities 100 52 350 227
Federal funds sold and other 24 23 104 80
--- --- --- ---
Total interest income 20,081 13,742 68,721 43,432
------ ------ ------ ------
Interest expense
Deposits 2,725 1,493 8,688 5,301
Federal funds purchased and repurchase
agreements 74 53 306 176
Federal Home Loan Bank advances 87 73 312 262
--- --- --- ---
Total interest expense 2,886 1,619 9,306 5,739
----- ----- ----- -----
Net interest income 17,195 12,123 59,415 37,693
Provision for loan losses 1,876 885 5,030 2,374
----- --- ----- -----
Net interest income after provision for
loan losses 15,319 11,238 54,385 35,319
------ ------ ------ ------
Noninterest income
Service charges on deposit accounts 35 16 113 53
Other service charges and fees 657 628 2,644 1,777
Net gains on sale of loans 1,386 1,588 6,959 5,814
Loan servicing fees, net of amortization
of servicing assets 40 81 227 254
Gain on sales and calls of securities 304 166 833 259
Net gain (loss) on foreclosed assets (4 ) (124 ) 26 (96 )
Wealth management 369 275 1,283 639
Other 205 200 771 1,255
--- --- --- -----
Total noninterest income 2,992 2,830 12,856 9,955
----- ----- ------ -----
Noninterest expense
Salaries and employee benefits 6,080 5,666 24,040 19,160
Occupancy and equipment 1,628 1,491 6,589 4,729
FDIC assessment expense 375 180 1,167 600
Marketing 261 258 956 728
Professional fees 1,043 446 2,425 2,040
Other 1,707 1,726 6,963 4,469
----- ----- ----- -----
Total noninterest expense 11,094 9,767 42,140 31,726
------ ----- ------ ------
Income before income tax expense 7,217 4,301 25,101 13,548
Income tax expense 2,553 1,466 9,021 5,134
----- ----- ----- -----
Net income 4,664 2,835 16,080 8,414
Dividends paid on Series A preferred
stock (25 ) (25 ) (100 ) (100 )
---- ---- ----- -----
Net income available to common
shareholders $4,639 $2,810 $15,980 $8,314
====== ====== ======= ======
Earnings per share:
Basic $0.44 $0.36 $1.62 $1.32
Diluted 0.41 0.34 1.54 1.27
FRANKLIN FINANCIAL NETWORK, INC
AVERAGE BALANCES(7) - ANALYSIS OF YIELDS & RATES (UNAUDITED)
(Amounts in thousands, except percentages)
Three Months Ended December 31,
-------------------------------
2015 2014
---- ----
Average Interest Average Average Interest Average
Balance Inc / Exp Yield / Rate Balance Inc / Exp Yield / Rate
------- --------- ------------ ------- --------- ------------
ASSETS:
Loans(1)(6) $1,232,217 $15,520 5.00 % $776,927 $11,119 5.68 %
Securities available for
sale(6) 584,826 3,686 2.50 % 343,693 2,168 2.50 %
Securities held to
maturity(6) 147,236 1,529 4.12 % 54,768 380 2.75 %
Certificates of deposit at
other financial
institutions 250 1 1.59 % 250 1 1.59 %
Federal funds sold and
other(2) 44,952 123 1.09 % 35,912 74 0.82 %
------ --- ----- ------ --- -----
TOTAL INTEREST EARNING
ASSETS $2,009,481 $20,859 4.12 % $1,211,550 $13,742 4.50 %
Allowance for loan losses (10,454 ) (6,214 )
All other assets 78,877 66,245
------ ------
TOTAL ASSETS $2,077,904 $1,271,581
LIABILITIES & SHAREHOLDERS' EQUITY
Deposits:
Interest checking $262,076 $201 0.30 % $221,337 $102 0.18 %
Money market 504,715 698 0.55 % 359,317 572 0.63 %
Savings 41,004 47 0.45 % 28,586 34 0.47 %
Time deposits 784,194 1,780 0.90 % 331,803 785 0.94 %
Federal Home Loan Bank
advances 57,000 87 0.61 % 27,674 73 1.05 %
Federal funds purchased and
other(3) 53,122 73 0.55 % 32,677 53 0.64 %
------ --- ----- ------ --- -----
TOTAL INTEREST BEARING
LIABILITIES $1,702,111 $2,886 0.67 % $1,001,394 $1,619 0.64 %
Demand deposits 179,689 145,530
Other liabilities 7,644 5,017
Total shareholders' equity 188,460 119,640
------- -------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $2,077,904 $1,271,581
NET INTEREST SPREAD(4)(6) 3.45 % 3.86 %
NET INTEREST INCOME(6) $17,973 $12,123
NET INTEREST MARGIN(5)(6) 3.55 % 3.97 %
(1) Loan balances include both loans
held in the Bank's portfolio
and mortgage loans held for
sale and are net of deferred
origination fees and costs.
Non-accrual loans are included
in total loan balances.
(2) Includes federal funds sold,
capital stock in the Federal
Reserve Bank and Federal Home
Loan Bank, and interest-
bearing deposits at the Federal
Reserve Bank and the Federal
Home Loan Bank.
(3) Includes repurchase agreements.
(4) Represents the average rate
earned on interest-earning
assets minus the average rate
paid on interest-bearing
liabilities.
(5) Represents net interest income
(annualized) divided by total
average earning assets.
(6) Interest income and rates for
2015 include the effects of
tax-equivalent adjustments to
adjust tax-exempt interest
income on tax-exempt loans and
investment securities to a
fully taxable basis. Due to
immateriality, interest income
and rates for 2014 exclude the
effects of tax-equivalent
adjustments to adjust tax-
exempt interest income on tax-
exempt loans and investment
securities to a fully taxable
basis.
(7) Averages balances are average
daily balances.
Year ended December 31,
-----------------------
2015 2014
---- ----
Average Interest Average Average Interest Average
Balance Inc / Exp Yield / Rate Balance Inc / Exp Yield / Rate
------- --------- ------------ ------- --------- ------------
ASSETS:
Loans(1)(6) $1,009,130 $53,647 5.32 % $609,714 $33,585 5.51 %
Securities available for
sale(6) 545,878 13,314 2.44 % 307,723 7,961 2.59 %
Securities held to
maturity(6) 80,932 2,887 3.57 % 57,576 1,579 2.74 %
Certificates of deposit at
other financial
institutions 250 6 2.40 % 126 3 2.38 %
Federal funds sold and
other(2) 48,883 449 0.92 % 33,017 304 0.92 %
------ --- ----- ------ --- -----
TOTAL INTEREST EARNING
ASSETS $1,685,073 $70,303 4.17 % $1,008,156 $43,432 4.31 %
Allowance for loan losses (8,398 ) (5,655 )
All other assets 74,022 47,188
------ ------
TOTAL ASSETS $1,750,697 $1,049,689
LIABILITIES & SHAREHOLDERS'
EQUITY
Deposits:
Interest checking $268,745 $806 0.30 % $198,832 $510 0.26 %
Money market 464,588 2,616 0.56 % 300,643 $2,037 0.68 %
Savings 35,779 164 0.46 % 24,088 $117 0.49 %
Time deposits 545,405 5,102 0.94 % 273,006 $2,637 0.97 %
Federal Home Loan Bank
advances 46,447 312 0.67 % 28,510 $262 0.92 %
Federal funds purchased and
other(3) 48,789 306 0.63 % 23,914 $176 0.74 %
------ --- ----- ------ ---- -----
TOTAL INTEREST BEARING
LIABILITIES $1,409,753 $9,306 0.66 % $848,993 $5,739 0.68 %
Demand deposits 164,284 100,105
Other liabilities 7,727 3,024
Total shareholders' equity 168,933 97,567
------- ------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,750,697 $1,049,689
NET INTEREST SPREAD(4)(6) 3.51 % 3.63 %
NET INTEREST INCOME(6) $60,997 $37,693
NET INTEREST MARGIN(5)(6) 3.62 % 3.74 %
(1) Loan balances include both loans
held in the Bank's portfolio
and mortgage loans held for
sale and are net of deferred
origination fees and costs.
Non-accrual loans are included
in total loan balances.
(2) Includes federal funds sold,
capital stock in the Federal
Reserve Bank and Federal Home
Loan Bank, and interest-
bearing deposits at the Federal
Reserve Bank and the Federal
Home Loan Bank.
(3) Includes repurchase agreements.
(4) Represents the average rate
earned on interest-earning
assets minus the average rate
paid on interest-bearing
liabilities.
(5) Represents net interest income
(annualized) divided by total
average earning assets.
(6) Interest income and rates for
2015 include the effects of
tax-equivalent adjustments to
adjust tax-exempt interest
income on tax-exempt loans and
investment securities to a
fully taxable basis. Due to
immateriality, interest income
and rates for 2014 exclude the
effects of tax-equivalent
adjustments to adjust tax-
exempt interest income on tax-
exempt loans and investment
securities to a fully taxable
basis.
(7) Averages balances are average
daily balances.
FRANKLIN FINANCIAL NETWORK, INC.
SUMMARY QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED)
(Amounts in thousands, except per share data and percentages)
As of and for the three months ended
------------------------------------
Dec 31, 2015 Sept 30, 2015 Jun 30, 2015 Mar 31, 2015 Dec 31, 2014
------------ ------------- ------------ ------------ ------------
Income Statement Data ($):
Interest income 20,081 19,301 15,413 13,926 13,742
Interest expense 2,886 2,565 2,086 1,769 1,619
Net interest income 17,195 16,736 13,327 12,157 12,123
Provision for loan
losses 1,876 1,724 805 625 885
Noninterest income 2,992 3,798 2,851 3,215 2,830
Noninterest expense 11,094 10,853 10,572 9,621 9,767
Net Income before
taxes 7,217 7,957 4,801 5,126 4,301
Income tax expense 2,553 2,807 1,667 1,994 1,466
Net income 4,664 5,150 3,134 3,132 2,835
Net income available
to common
shareholders 4,639 5,125 3,109 3,107 2,810
Earnings per share,
basic 0.44 0.49 0.30 0.39 0.36
Earnings per share,
diluted 0.41 0.46 0.28 0.37 0.34
Profitability (%)
Return on average
assets 0.89 1.07 0.79 0.90 0.88
Return on average
equity 9.82 11.25 7.00 10.14 9.40
Return on average
tangible common
equity 11.01 12.70 7.89 12.18 11.42
Efficiency ratio 54.95 52.85 65.35 62.59 65.32
Net Interest
margin(1) 3.39 3.60 3.51 3.65 3.97
Balance Sheet Data ($):
Loans (including
HFS) 1,317,905 1,138,492 979,033 897,001 805,650
Loan loss reserve 11,587 9,744 8,016 7,308 6,680
Cash 52,394 47,658 43,413 48,580 49,347
Securities 734,038 756,554 681,999 507,170 449,037
Goodwill 9,124 9,124 9,124 9,124 9,124
Intangible assets 2,107 2,249 2,414 2,585 2,762
Assets 2,167,282 2,002,538 1,766,752 1,509,430 1,355,827
Deposits 1,814,039 1,714,594 1,491,986 1,271,602 1,172,233
Liabilities 1,978,466 1,814,928 1,589,671 1,330,889 1,234,028
Total equity 188,816 187,610 177,081 178,541 121,799
Common equity 178,816 177,610 167,081 168,541 111,799
Tangible Common
equity 167,586 166,237 155,543 156,832 99,913
Asset Quality (%)
Nonperforming loans/
total loans
(excludes HFS) 0.25 0.07 0.10 0.14 0.15
Nonperforming assets
/total loans(2) +
OREO 0.27 0.09 0.12 0.19 0.24
Loan loss reserve /
total loans
(excludes HFS) 0.89 0.87 0.83 0.84 0.85
Net charge-offs /
average loans 0.01 0.00 0.04 0.00 0.04
Capital (%)
Tangible common
equity to tangible
assets 7.77 8.35 8.86 10.47 7.43
Leverage ratio(3) 8.27 8.67 10.19 11.41 8.57
Tier 1 common
ratio(3) 7.93 10.92 12.29 14.01 10.51
Tier 1 risk-based
capital ratio(3) 10.33 11.40 12.86 14.95 11.58
Total risk-based
capital ratio(3) 10.92 12.07 13.50 15.64 12.30
(1) Net interest margins shown in
the table above do not include
tax-equivalent adjustments.
(2) Total loans in this ratio
exclude loans held for sale.
(3) Capital ratios for December 31,
2015 are estimates, since the
Company's quarterly regulatory
reports have not yet been
filed.
GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures
Some of the financial data included in our selected historical consolidated financial information are not measures of financial performance recognized by GAAP. Our management uses these non-GAAP financial measures in its analysis of our performance:
-- "Common shareholders' equity" is defined as total shareholders' equity
at end of period less the liquidation preference value of the preferred
stock;
-- "Tangible common shareholders' equity" is common shareholders' equity
less goodwill and other intangible assets;
-- "Total tangible assets" is defined as total assets less goodwill and
other intangible assets;
-- "Other intangible assets" is defined as the sum of core deposit
intangible and SBA servicing rights;
-- "Tangible book value per share" is defined as tangible common
shareholders' equity divided by total common shares outstanding. This
measure is important to investors interested in changes from
period-to-period in book value per share exclusive of changes in
intangible assets;
-- "Tangible common shareholders' equity ratio" is defined as the ratio of
tangible common shareholders' equity divided by total tangible assets.
We believe that this measure is important to many investors in the
marketplace who are interested in relative changes from period-to period
in common equity and total assets, each exclusive of changes in
intangible assets;
-- "Return on Average Tangible Common Equity" is defined as net income
available to common shareholders divided by average tangible common
shareholders' equity;
-- "Efficiency ratio" is defined as noninterest expenses divided by our
operating revenue, which is equal to net interest income plus
noninterest income;
-- "Adjusted yield on loans" is our yield on loans after excluding loan
accretion from our acquired loan portfolio. Our management uses this
metric to better assess the impact of purchase accounting on our yield
on loans, as the effect of loan discount accretion is expected to
decrease as the acquired loans mature or roll off of our balance sheet;
-- "Net interest margin" is defined as annualized net interest income
divided by average interest-earning assets for the period;
-- "Adjusted net interest margin" is net interest margin after excluding
loan accretion from the acquired loan portfolio and premiums for
acquired time deposits. Our management uses this metric to better assess
the impact of purchase accounting on net interest margin, as the effect
of loan discount accretion and accretion of net discounts and premiums
related to deposits is expected to decrease as the acquired loans and
deposits mature or roll off of our balance sheet.
We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that our non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. The following reconciliation table provides a more detailed analysis of these non-GAAP financial measures:
(Amounts in thousands, except share/ As of or for the Three Months Ended
per share data and percentages)
Dec 31, Sept 30, Jun 30, Mar 31, Dec 31,
2015 2015 2015 2015
2014
--- ---- ----
Total shareholders' equity $188,816 $187,610 $177,081 $178,541 $121,799
Less: Preferred stock 10,000 10,000 10,000 10,000 10,000
Total common shareholders' equity 178,816 177,610 167,081 168,541 111,799
Less: Goodwill and other intangible assets 11,231 11,373 11,538 11,709 11,886
Tangible common shareholders' equity $167,585 $166,237 $155,543 $156,832 $99,913
Common shares outstanding 10,571,377 10,524,630 10,502,671 10,465,930 7,756,411
---------- ---------- ---------- ---------- ---------
Tangible book value per share $15.85 $15.80 $14.81 $14.99 $12.88
====== ====== ====== ====== ======
Net income available to common shareholders $4,639 $5,125 $3,109 $3,107 $2,810
Average tangible common equity 167,151 160,071 157,959 103,475 97,630
------- ------- ------- ------- ------
Return on average tangible common equity 11.01 % 12.70 % 7.89 % 12.18 % 11.42 %
====== ====== ===== ====== ======
Efficiency Ratio:
Net interest income $17,195 $16,736 $13,327 $12,157 $12,123
Noninterest income 2,992 3,798 2,851 3,215 2,830
Operating revenue 20,187 20,534 16,178 15,372 14,953
Expense
Total noninterest expense 11,094 10,853 10,572 9,621 9,767
Efficiency ratio 54.96 % 52.85 % 65.35 % 62.59 % 65.32 %
====== ====== ====== ====== ======
Reported yield on loans(1) 4.99 % 5.60 % 5.37 % 5.35 % 5.67 %
Effect of accretion income on acquired loans (0.11 %) (0.42 %) (0.32 %) (0.28 %) (0.36 %)
Adjusted yield on loans 4.88 % 5.18 % 5.05 % 5.07 % 5.31 %
===== ===== ===== ===== =====
Reported net interest margin(1) 3.39 % 3.60 % 3.51 % 3.65 % 3.97 %
Effect of accretion income on acquired loans (0.07 %) (0.24 %) (0.19 %) (0.18 %) (0.23 %)
Effect of premium amortization of acquired deposits (0.00 %) (0.00 %) (0.01 %) (0.01 %) (0.02 %)
Adjusted net interest margin 3.32 % 3.36 % 3.31 % 3.46 % 3.72 %
===== ===== ===== ===== =====
(1) The yields and margins reported
in the table above do not
include any tax-equivalent
adjustments.
Contact: Aimee Punessen, (615) 236-8329
aimee.punessen@franklinsynergy.com
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SOURCE Franklin Financial Network, Inc.
